INTERMEDIATE ACCT.-MYLAB COMBO ACCESS
3rd Edition
ISBN: 9780137391707
Author: GORDON
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 10, Problem 10.19BE
To determine
The per unit value of ending inventory using lower-of-cost-or-market method.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Weathertough Boot Company manufactures two types of boots-rain boots and snow boots. Information related to both products is presented in the following table.
(Click the icon to view the data.)
Determine the ending inventory value per unit using the lower-of-cost-or-market rule assuming that WeathertoughBoot uses the group-by-group approach to LCM. WeathertoughBoot uses FIFO for inventory costing
purposes. (Assume that Weathertough Boot Company is a U.S. GAAP reporter.)
Begin by completing the table below to identify the market value for each group and to determine the ending inventory value per unit using the lower-of-cost-or-market.
FIFO
Cost
Group
Rain boots
Snow boots
Market Lower of Cost
Value
or Market
Data table
Group
Rain
Snow
Current
Replacement Cost
$
68
85
Selling Disposal Normal Profit
Price Costs
$93
115
$ 23 $
25
Print
Done
Margin
8
14
$
Cost
61
97
-
X
Huddell Company, which is both a wholesaler and retailer, purchases merchandise from various suppliers. Thedollar-value LIFO method is used for the wholesale inventories.Huddell determines the estimated cost of its retail ending inventories using the conventional retail inventorymethod, which approximates lower of average cost or market.Required:1. a. What are the advantages of using the dollar-value LIFO method as opposed to the traditional LIFOmethod?b. How does the application of the dollar-value LIFO method differ from the application of the traditionalLIFO method?2. a. In the calculation of the cost-to-retail percentage used to determine the estimated cost of its ending inventories, how should Huddell use∙ Net markups?∙ Net markdowns?b. Why does Huddell’s retail inventory method approximate lower of average cost or market?
MusicMagic specializes in sound equipment. Company records indicate the following data for a line of speakers:
(Click the icon to view the data.)
Read the requirements.
Co
Requirement 1. Determine the amounts that MusicMagic should report for cost of goods sold and ending inventory two ways: a. FIFO and b. LIFO. (MusicMagic uses a perpetual inventory
system.)
Start by determining the amounts that MusicMagic should report for cost of goods sold and ending inventory under a. FIFO.
FIFO method cost of goods sold =
FIFO method ending inventory =
Data table
Date
Mar 1
Mar 2
Mar 7
Mar 13
Item
Balance
Purchase
Sale
Sale
Print
Quantity
14
5
7
6
Unit Cost
$
Done
41
48
Sale Price
$
109
102
X
Chapter 10 Solutions
INTERMEDIATE ACCT.-MYLAB COMBO ACCESS
Ch. 10 - How is inventory tracked under a perpetual...Ch. 10 - Barbara Wight is Chief Financial Officer at Taylor...Ch. 10 - What costs should be included in the unit cost of...Ch. 10 - When does the inventory allocation problem arise?Ch. 10 - Explain the difference between the FIFO method of...Ch. 10 - Which method of inventory results in an inventory...Ch. 10 - If unit costs are rising and inventory levels are...Ch. 10 - How can financial statements be converted from the...Ch. 10 - Explain the unit of measure under the dollar-value...Ch. 10 - What do firms use as the market value when...
Ch. 10 - Do U.S. GAAP and IFRS treat inventory write-downs...Ch. 10 - Under IFRS, how do firms determine...Ch. 10 - How does the conventional retail method...Ch. 10 - Why would a company use the gross profit method to...Ch. 10 - How are required LIFO disclosures used to compute...Ch. 10 - How does a company build LIFO layers under the...Ch. 10 - Giddens Company adopted the dollar-value UFO...Ch. 10 - The Loyd Company lad 150 units of product Omega on...Ch. 10 - Simmons, Inc. uses the lower-of-cost-or-market...Ch. 10 - Simmons, Inc. uses the lower-of-cost-or-market...Ch. 10 - The Loyd Company had 150 units of product Omega on...Ch. 10 - The Loyd Company had 150 units of product Omega on...Ch. 10 - On March 1, Year 1, LuxWear me had beginning...Ch. 10 - Prob. 10.1BECh. 10 - Prob. 10.2BECh. 10 - Prob. 10.3BECh. 10 - Prob. 10.4BECh. 10 - FIFO, Perpetual Basis. Spider incorporated...Ch. 10 - LIFO, Perpetual Basis. Using the information...Ch. 10 - Prob. 10.7BECh. 10 - LIFO Reserve. Best Stores is considering a change...Ch. 10 - LIFO. Perpetual Basis. Source Enterprises reports...Ch. 10 - LIFO Liquidation. Using the information provided...Ch. 10 - Prob. 10.11BECh. 10 - Dollar-Value LIFO, Conversion to FIFO. Using the...Ch. 10 - Lower of Cost or Market. Count Clothing Company...Ch. 10 - Lower of Cost or Market. Using the information in...Ch. 10 - Lower of Cost or Market, IFRS. Using the...Ch. 10 - Prob. 10.16BECh. 10 - Prob. 10.17BECh. 10 - Lower of Cost or Market. Sarat Boot Company...Ch. 10 - Prob. 10.19BECh. 10 - Prob. 10.20BECh. 10 - Prob. 10.21BECh. 10 - Gross Profit Method. Sammi Company needs to...Ch. 10 - Prob. 10.23BECh. 10 - LIFO Retail Inventory Method. Complete the...Ch. 10 - LIFO Retail Inventory Method. Complete the...Ch. 10 - Moving Average, FIFO, LIFO. Arthur Lloyd...Ch. 10 - Moving Average, FIFO, LIFO, Presentation, and...Ch. 10 - Moving Average, FIFO, LIFO. Zoola, Inc. provided...Ch. 10 - Prob. 10.4ECh. 10 - LIFO, Conversion to FIFO. Inventory transactions...Ch. 10 - LIFO. Burke Company uses the LIFO perpetual method...Ch. 10 - Prob. 10.7ECh. 10 - Prob. 10.8ECh. 10 - Prob. 10.9ECh. 10 - Prob. 10.10ECh. 10 - Lower of Cost or Market. All-Kinds-of-Cases...Ch. 10 - Prob. 10.12ECh. 10 - Lower of Cost or Market. Printmaster Distributors...Ch. 10 - Prob. 10.14ECh. 10 - Prob. 10.15ECh. 10 - Conventional Retail Inventory Method. Melvin...Ch. 10 - Gross Profit Method. A tsunami destroyed Kyoto...Ch. 10 - Prob. 10.18ECh. 10 - Prob. 10.19ECh. 10 - Prob. 10.20ECh. 10 - Dollar-Value LIFO Retail Inventory Method....Ch. 10 - Moving Average, FIFO, LIFO. Morocco Imports...Ch. 10 - Prob. 10.2PCh. 10 - Prob. 10.3PCh. 10 - Prob. 10.4PCh. 10 - Prob. 10.5PCh. 10 - Prob. 10.6PCh. 10 - Dollar-Value LIFO. LIFO Liquidation. Silvio's...Ch. 10 - Lower of Cost or Market. Framingdale Factories....Ch. 10 - Lower of Cost or Market. O'Sullivan Corporation...Ch. 10 - Conventional Retail Inventory Method. John Stevens...Ch. 10 - Prob. 10.11PCh. 10 - Prob. 10.12PCh. 10 - Basic Retail Inventory Method and Conventional...Ch. 10 - Basic Retail Inventory Method and Conventional...Ch. 10 - Prob. 10.15PCh. 10 - Conventional Retail Inventory Method, Lower of...Ch. 10 - Prob. 1JCCh. 10 - Judgment Case 2: Inventory Costing BBS is a...Ch. 10 - Prob. 3JCCh. 10 - Prob. 1FSCCh. 10 - Prob. 2FSCCh. 10 - Prob. 1SSCCh. 10 - Prob. 2SSCCh. 10 - Surfing the Standards Case 3: Time Shares Treasure...Ch. 10 - Surfing the Standards Case 4: Lower of Cost or...Ch. 10 - Prob. 1BCCCh. 10 - Basis for Conclusions Case 2: The Lower of Cost or...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- A home improvement store, like Lowe’s, carries the following items:Required:1. Compute the total cost of inventory.2. Determine whether each inventory item would be reported at cost or net realizable value. Multiply the quantity of each inventory item by the appropriate cost or NRV amount and place the total in the “Lower of Cost and NRV” column. Then determine the total of that column.3. Compare your answers in requirement 1 and requirement 2 and then record any necessary adjustment to write down inventory from cost to net realizable value.4. Discuss the financial statement effects of using lower of cost and net realizable value to report inventory.arrow_forwardPresented below is information related to Sheffield Inc's inventory, assuming Sheffield uses lower-of-LIFO cost-or-market. Historical cost Selling price Cost to distribute Current replacement cost Normal profit margin (per unit) Floor $ Skis $254.60 $ $ 284.08 25.46 272.02 42.88 Boots $142.04 194.30 10.72 140.70 Parkas $71.02 98.83 Determine the following: (a) The two limits to market value (i.e., the ceiling and the floor) that should be used in the lower-of-cost-or-market computation for skis. (Round answers to 2 decimal places, e.g. 52.75.) Ceiling $ 3.35 68.34 38.86 28.48 (b) The cost amount that should be used in the lower-of-cost-or-market comparison of boots. (Round answer to 2 decimal places, e.g. 52.75.) (c) The market amount that should be used to value parkas on the basis of the lower-of-cost-or-market. (Round answer to 2 decimal places, e.g. 52.75.)arrow_forwardYou have the following information for Wildhorse Gems. Wildhorse uses the periodic system of accounting for its inventory transactions. Wildhorse only carries one brand and size of diamonds-all are identical. Each batch of diamonds purchased is carefully coded and marked with its purchase cost. March 1 March 31 March 5: March 10- March 25 Beginning inventory 150 diamonds at a cost of $320 per diamond. Purchased 200 diamonds at a cost of $360 each. Sold 180 diamonds for $630 each. Purchased 350 diamonds at a cost of $385 each. Sold 395 diamonds for $680 each.arrow_forward
- Smmons. Inc. uses the lower-of-cont-ormarket method to value s inventory that is accounted for using the FIFO method. Data regarding an tam in its inventory ls as follows Cost $26 Replacement cost 20 Selling price 30 Cost of completion and disposal 2 Normal profit margin 7. What is the lower-of-cost-or-mariket for this item?arrow_forwardRefer to the data in attached image. 1.Using the perpetual inventory system, compute the cost of ending inventory, cost of goods sold, and gross margin. Use the average-cost, FIFO, and LIFO inventory costing methods. (Round unit costs to the nearest cent.) 2.Explain the reasons for the differences in gross mar-gin produced by the three methods.arrow_forwardMusicPlace specializes in sound equipment. Company records indicate the following data for a line of speakers (Click the icon to view the data) Read the requirements Requirement 1. Determine the amounts that MusicPlace should report for cost of goods sold and ending inventory two ways: a. FIFO and b. LIFO (MusicPlace uses a perpetual inventory system.) Start by determining the amounts that MusicPlace should report for cost of goods sold and ending inventory under a FIFO FIFO method cost of goods sold FIFO method ending inventory Determinie the amounts that MusicPlace should report for cost of goods sold and ending inventory under b. LIFO. LIFO method cost of goods sold LIFO method ending inventory Requirement 2. MusicPlace uses the FIFO method. Prepare the company's income statement for the month ended March 31, 2021, reporting gross profit. Operating expenses totaled $280, and the income tax rate was 40%. (Round answers to the nearest dollar) MusicPlace Income Statement Month Ended…arrow_forward
- What is true in explaining ABC analysis? This process divides items into three classes according to their inventory level Class A items normally have the least dollar usages Class B and class C account for most of inventory items but not dollar usages Class C accounts for the largest dollar usage of any class Which one of the following is a reason to have small inventories? To improve customer service To reduce ordering costs To reduce equipment setup costs To reduce interest expense or opportunity costsarrow_forwardHalf page response please. Identify the three types of inventory and describe examples for Under Armor, Ghirardelli Chocolate, and Ikea. Please also describe LIFO, FIFO, and average cost and how to calculate cost of goods sold and ending inventory under each methodarrow_forwardCalculate cost of goods sold and ending inventory for Emergicare’s bandages orders using FIFO, LIFO and average cost. There are 30 units in ending inventory. (Do not round intermediate calculations, such as average cost per unit values. Round your answers to the nearest cent.)arrow_forward
- ! Required information [The following information applies to the questions displayed below.] O'Brien Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations: Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses $ 27 $15 $5 $ 2 $ 540,000 $ 190,000 During its first year of operations, O'Brien produced 94,000 units and sold 78,000 units. During its second year of operations, it produced 80,000 units and sold 91,000 units. In its third year, O'Brien produced 82,000 units and sold 77,000 units. The selling price of the company's product is $75 per unit. 2. Assume the company uses variable costing and a LIFO inventory flow assumption (LIFO means last-in first-out. In other words, it assumes that the newest units in inventory are sold…arrow_forwardIn some instances, accounting principles require a departure from valuing inventories at cost alone. Determine the proper unit inventory price in the following cases using LCNRV. Cases 00100 00200 00300 00400 00500 Cost $15.90 $16.10 $15.90 $15.90 $15.90 Sales value 14.80 19.20 15.20 10.40 17.80 Estimated cost to complete 1.50 1.90 1.65 .80 1.00 Estimated cost to sell .50 .70 .55 .40 .60arrow_forwardSLO-5.1. for a merchandising business is determined by subtracting the Cost of Goods Sold from the Sale Income account. OOperating Income ONet Income OGross Profit OMerchandise Available for Salearrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:9781337679503
Author:Gilbertson
Publisher:Cengage
Chapter 6 Merchandise Inventory; Author: Vicki Stewart;https://www.youtube.com/watch?v=DnrcQLD2yKU;License: Standard YouTube License, CC-BY
Accounting for Merchandising Operations Recording Purchases of Merchandise; Author: Socrat Ghadban;https://www.youtube.com/watch?v=iQp5UoYpG20;License: Standard Youtube License